Due Diligence

Signing a contract to purchase a house is just the beginning. Buyers must then go through the due diligence period, which allows them to inspect the property and analyze important information before closing the sale. The due diligence period can be complex and requires a lot of attention.

The so-called due diligence process, or "due diligence," helps to avoid a bad investment, failure, or allows renegotiation of contract terms or sale price, ensuring that the property to be acquired meets the intended purpose and has no contingencies. Undoubtedly, purchasing real estate is one of the most important decisions we humans make, from a financial, family, and personal standpoint.

It is increasingly common for people to conduct due diligence to avoid negative experiences in the purchasing process, facilitating decision-making. In general terms, the investigation process regarding the real estate is to uncover possible hidden risks that may harm the buyer's interests.

What do we study in due diligence?

1. Property registry certification: it is fundamental as it will determine if the selling person is duly authorized, as well as to corroborate that the property measurements match those on the plan.
   

• Review of encumbrances: it is of utmost importance to determine what encumbrances affect the property.

• Review of liens: it is not necessarily a reason to discard a property for having liens; studying them will indicate if the issue can be resolved or not.

1. Review of cadastral plan: it will help confirm the property's measurements, and when dealing with very old plans, it is recommended to hire a topography professional for measurements rectification.

2. Construction permits or Land Use: The construction permits' record allows us to verify that the corresponding permits have been requested for said construction and that they comply with the area and design.

• Land use allows us to know what is possible to build on the property, how it should be built, if subdivision is allowed and in how many parts, as well as knowing the percentage of the lot that can be built and what guidelines must be respected.

1. Certification of municipal and tax taxes: The property is responsible for municipal and tax debts, so they must be kept completely up to date.

• In the case of companies, they must be up to date with the payment of taxes for legal entities before the Tax Administration.

1. Availability of water and electricity: it will help us verify if the property is suitable for having the services, know the company that will provide the service and its conditions, as well as knowing if in some areas the service can be received but some work must be done by the owner, such as payment for field studies, extension of lines, or installation of transformers.

It would also be added that the due diligence period is normally between 21 and 30 business days.

And that, although it may seem an unnecessary expense to many people, it is really important to hire an expert in these matters to avoid negative experiences or future problems, which can lead to bad investments or the acquisition of a property that cannot be developed as desired.